Lesson three: Talent is critical for social enterprises

Continuing my blog series on the foundation’s 10 lessons learned in impact investing, from our experience in India over the last decade, I look at how quality talent is especially important in social enterprises and the sector-specific challenges this presents.

Why talent is critical

Most social ventures begin with minimal financial resources and do not always attract the best talent. To be successful, organizations need to invest in hiring the right team from the start. In our work in the education sector, test preparation startup Avanti used this approach to deliver coaching for competitive exams to low-income students.

Founded in 2010, Avanti aims to give every student an opportunity to study at India’s best colleges. Today, it is amongst the most trusted coaching companies in India, with presence in 11 states. This was possible because the founders, Krishna Ramkumar and Akshay Saxena, understood that only high-quality, passionate, and relevant talent could create disruption in the education sector and make it affordable for all.

The story of Avanti

Passion drove Akshay and Krishna to abandon successful corporate careers and start Avanti. Friends from IIT Bombay, Krishna was an IIT gold medalist and Akshay worked in Silicon Valley. Following their instincts, they started Avanti with a team that was just as committed about making a difference. As social enterprises have long, complex journeys, several of their highly talented and motivated employees felt they were not creating the impact they desired. This led to frustration along the way, but these experiences also helped the Avanti team to make expectation-setting and goal clarity an integral part of their recruitment process. While passion continues to be an important filter, aligning expectations allows every individual to be grounded in reality.

Clearly, passion, clarity of expectations, and growing the right culture can lead to higher chances of retaining talent and driving employees to excel.

How does a social enterprise attract and retain talent that is strong, relevant and passionate?

Finding the right talent. Don’t try and fit a square peg in a round hole, even if the peg is well-polished. In the case of Avanti, given their network, Akshay and Krishna initially relied on talent from premier institutions like IITs and IIMs. However, they quickly realized that certain roles required different candidate profiles. For instance, in operations, they needed seasoned talent with experience in setting up systems and complying with processes. This made them see the importance of understanding the short-term needs and long-term focus for each role.

Understanding that social ventures cannot have the luxury of using compensation as a carrot. At the same time, it is difficult for organizations to survive with ‘underpaid’ talent, especially with individuals in the early stages of their careers. This has two implications for social enterprises—avoiding long term compensation subsidies and planning for attrition.

Recognizing that career opportunities should be well-rounded. While a company’s social mission is a motivating factor for employees, it must be complemented with the right culture, job responsibilities and career progression roadmap. New teachers prefer Avanti because it puts them in front of a class within three months. Contrast this some leading companies in this sector where the norm is to let newcomers teach a class only after 18 to 24 months of joining. Social entrepreneurs need to think creatively to make the overall package attractive for the team.

Knowing that continuous training and development matters. It is crucial to create an atmosphere where talented individuals from different social contexts can work together effectively. Most social enterprises create their field level organization through internal promotions. Take the case of a loan officer in a microfinance institution who is promoted to a branch manager, then becomes a hub manager, and so on. Most of these employees do not have prior training in people management, which becomes a critical component of their roles as they move up their career trajectory. Social enterprises need to invest in team management and leadership training. This was done at Avanti, where one of their best people was made the recruitment head. As a result, the organization today has tripled its staff to over 200 in the last 18 months, and attrition is at an all-time low.

A strong focus on talent can be seen across our work at the foundation. Ujjivan, a leading microfinance institution, has consistently been ranked among India’s Best Workplaces by The Economic Times. In 2016, it was rated the ‘3rd Best Place to Work’, after Google and American Express. This is rare for a young company (less than a decade old) of 7,500 employees that have tough jobs in low- income communities.

Clearly, passion, clarity of expectations, and growing the right culture can lead to higher chances of retaining talent and driving employees to excel.

Next: The role of technology as an enabler of success in an organization.